Do doctors (hospitals, clinics, etc.) charge different customers different rates for the same procedures? I am specifically talking about customers with different insurance providers or customer without insurance.
I am somewhat ignorant on the subject, but this is how I believe it works. A doctor sets a price for a certain procedure (for example, a physical). Let’s say the price is $500. Aetna then states (or negotiates) that it will only pay $400 for the physical. Blue Cross / Blue Shield states they will only pay $250. I am not talking about what the actual customer pays, which I know will vary depending upon their specific plan. I am talking about what the doctor actually receives in compensation, whether it be from the customer, from the insurance company, or a combination.
Is this a common practice in the medical industry? If so, it would seem like one of the primary benefits of medical insurance is the fact that they negotitate lower rates for their customers.
If a doctor agrees to accept patients from, for example, Blue Cross then they agree to charge what Blue Cross has established as the reasonable and customary charge for procedures. The doctor will also have a street price which is what they would charge someone with no insurance.
It’s not that the doctor charges different rates, it is that they agree to different rate structures depending on what insurance company is covering the procedure.
Without getting into a debate about the fairness aspects, that seems to be a huge disadvantage for individuals without insurance.
The reason I bring this up is that I recently changed insurance companies. When I went to the doctor, they erroneously charged me as if I did not have insurance. The cost was around $650. Then when I got everything straightened out the charge ended up only being around $250 because I had Aetna. It seems discriminatory towards people that do not have insurance. Why wouldn’t the cost still be $650 but Aetna only pays $250 leaving me with the responsibility to pay the difference?
I think that’s a great question, I have often wondered the same thing. And I don’t see the distinction between different “rate structures” and different “rates.”
My guess is that the difference is called “bulk pricing”. Blue Cross is able to negotiate a cheaper price because they will bring a bunch of customers to the doctor. Sorta like how warehouse stores get cheap prices for people who are willing to buy a whole case of whatever. The guy who is unable or unwilling to buy more than a small box of it will pay more per ounce.
It is a huge disadvantage, no question about that. It’s all about who has the power to negotiate. With an insurance company representing millions of customers and potentially a large part of a doctors business, they are in a position to obtain the best price. Representing only yourself, you don’t have that same power.
You don’t pay the difference because the doctor has agreed to accept $250 as full payment in exchange for having you (and other clients of Aetna) as their patient. If they attempted to bill you the difference, Aetna would be all over them and their agreement could be discontinued meaning that doctor would lose a bunch of patients. It is in their best interest (generally speaking) to abide by the agreement.
What the doctor charges is usually the same for all patients. This is because Medicare regulations (federal) as well as the contracts s/he has with other insurance companies pretty much require the doctor to CHARGE all patients the same for a particular service.
This charge would be the $650 in LonghornDave’s example.
Then what happens is that the insurance company (including Medicare) figure up an amount that they consider “reasonable and customary” or some such*. The doctor either does or doesn’t contract with that insurance company. Large provider groups can negotiate with the insurance companies for better rates; individual docs are generally stuck with whatever the insurance company wants to offer.
If the doctor is contracted with that insurance company, then s/he “disallows” everything over that amount. What’s left is the “allowed amount” or “allowable”. This “allowed amount” is by contract with insurance companies (or by federal legislation for Medicare). Medicaid works the same, but it’s state-legislated.
So the insurance company ('care/'caid) pays the “allowed amount” minus whatever deductible or copay you owe.
If your doctor doesn’t have a contract with your insurance, then the insurance will still pay their “allowed amount”, but the doctor isn’t required to “disallow” the difference - s/he will bill you for it. It’s usually listed on your insurance EoB as “over reasonable and customary”* or something similar. (Except Medicare - the doc is still held to an allowable if they don’t contract with Medicare, it’s just a different allowable. Hey, they’re the feds, they can do what they want.)
Does this screw patients who pay their own bills? Yes, yes it does. Once upon a time, many doctors would do writeoffs to bring privately-paid bills down to a level comparable to the insurance payments. However, the insurance companies started writing into their contracts that the docs can’t do that. At one point, Medicare also made the practice illegal (not sure if it still is).
Don’t necessarily believe the insurance company when they make it sound like it’s an excessive charge. I know of several instances where physician offices documented that their charges were right in line with all other charges in the area for the same service, but insurance will still claim the charge is excessive. As far as anyone can tell, they pull their figures out of the usual location and then claim them to be “reasonable and customary”.
Yes they do. I had a dental procedure without insurance and paid $180. Same procedure, same dentist 1 year later with insurance. They said the bill was $90, of which I paid 10%. When I asked about it, they said the insurance co. had negotiated that price. Yes, it doesn’t seem fair. Those who can afford the least, pay the most. I understand why, but still…
And never forget that if you are paying out of your own pocket, you can and should discuss fees with the doctor, including a possible reduction in price, and a payment plan.